If you are not working, why would someone wait until 70 to collect Social Security?

[msefren]

We filed a restricted application in March of this year before the rules changed on May 1st. We had planned on using "file and suspend" strategy. Spouse took her SS early and I filed for spousal benefits. I will wait until 70 to collect my SS (or as long as we can afford). We are currently "living off the hump" using pension and SS while not withdrawing from LT savings.

 

[ownyourfuture]

1) First, I don't trust the government. They may decide to cut benefits for future retired folks who start collecting sometime in the future. Are you absolutely sure that your benefits will be 8% a year higher per year when you finally collect? Maybe they will change the rules. (I think it would be easier for them to cut benefits of people who have not started collecting.)

I don't trust the government either. I will begin collecting as soon as possible.

 

[NYEXPAT]

It would be great if some people who started collecting Social Security at age 62 but did not need the money all that much, could help me defend the concept of collecting benefits at that age. There are tons of posts and articles talking about the glories of waiting until you are seventy. We have already heard those arguments.

Help me out, why would someone collect benefits at age 62 if you did not need the money right then?

I took it at 62, because I have 2 sons 1 and 10 who also receive (combined) what I receive so it effectively doubles my ss check until I am 79. I will stop taking my own at 66 (kids still receive theirs ) and let mine grow 8% per year until age 70. The advantage in this is my wife who is 30 years younger and a non citizen will be able to collect my full benefit after I kick off and she is 67.

That's the plan, unless I live to be 100 (Dad is going on 99) then she will have to wait to age 70 to collect!

 

[harley]

If it was just me I'd take it at 62 and allow my other assets to continue to (hopefully) grow to be left to my daughter and grandkids. But since there are two of us and my SS is significantly larger than DW's, I'll defer until 70 to leave her a larger survivor benefit. As far as starting hers, we'll probably hold off until FRA to give us a few more years of larger Roth conversion space, which is a nice strategy for helping our heirs minimize taxes. That's what will probably work best for us.

I wouldn't defer for the Roth conversion strategy if it was just me. For a single filer the 15% bracket just isn't that big.

 

[Sunset]

I took it at 62, because I have 2 sons 1 and 10 who also receive (combined) what I receive so it effectively doubles my ss check until I am 79. I will stop taking my own at 66 (kids still receive theirs ) and let mine grow 8% per year until age 70. The advantage in this is my wife who is 30 years younger and a non citizen will be able to collect my full benefit after I kick off and she is 67.

That's the plan, unless I live to be 100 (Dad is going on 99) then she will have to wait to age 70 to collect!

Can anyone start it , and then stop it to allow it to grow , or is this something very specific because you have young children (for an old guy). ??

 

[Bestwifeever]

Can anyone start it , and then stop it to allow it to grow , or is this something very specific because you have young children (for an old guy). ??

Here is an article explaining this complicated scenario--the dependent loophole has been closed for people younger than 66, I believe (toward the end of the article)--although one could still file at 62, suspend at FRA, and restart at 70, it looks like the dependents' benefits also are suspended now:https://www.kitces.com/blog/navigat...and-suspend-and-restricted-application-rules/

 

[sengsational]

Here's a link to someone that's calling it what some (I think) wise people have been calling it...longevity insurance.

The goal isn’t just to maximize money received. The goal is to maximize the chances of success in retirement. In many aspects of financial planning a little insurance increases your odds of success even while lowering your overall wealth.

Most People Take Social Security At The Worst Possible Age | Marotta On Money

 

[timo2]

I'm taking it at 70 to leave DW the most money I can (I'm older than her and have had a heart attack). I do get a pension, but it goes to 50% when I die. One of the ways I'm covering that gap is to take SS at 70.

 

[haha]

Here's a link to someone that's calling it what some (I think) wise people have been calling it...longevity insurance.


Most People Take Social Security At The Worst Possible Age | Marotta On Money

Over the years I have written several times similarly to this article. There are all kinds of special situations which are very important to the individuals who could be affected by these other than ordinary conditions. But the idea that the general case does not present a dominant strategy seems strange to me. It is insurance, at a cheap rate, and with the worlds most secure insurance company. Nevertheless, I am sure that these threads will continue to show up, and that many people who have no immediate need for the money, are not in a special category, and who are not deathly ill, will continue ti take SS at 62. One thing that is very often given inadequate weight is the prevailing level of interest rates on long term TIPS.

It is just something about how the human brain weighs outcomes and information. If there is a general idea to be gathered from this, I think it is that we tend to overweight dramatic or available but far from determinative factors. As Bayesians emphasize, the base case should carry a heavy weight.

Ha

 

[RunningBum]

Here's a link to someone that's calling it what some (I think) wise people have been calling it...longevity insurance.


Most People Take Social Security At The Worst Possible Age | Marotta On Money

And this quote from that article is another pertinent one:

If you die young, you nearly always have enough money. Therefore there is no need to gamble hoping for the case where you die young. The danger you are seeking to guard against is running out of money before you die. And living a long life always exceeds whatever break even points you compute.

 

[youbet]

Everyone here understands that "low return environment" is a forward-looking term.

I don't think that's true Michael. But I'm sure many do.

 

[youbet]

I'm taking it at 70 to leave DW the most money I can (I'm older than her and have had a heart attack). I do get a pension, but it goes to 50% when I die. One of the ways I'm covering that gap is to take SS at 70.

Every situation is different. I started SS at 62 to provide DW the most financial protection. She's impacted by GPO and cannot collect any of my SS if I predecease her.

 

[cyber888]

From what I have seen posted here, people will go through your sensical suggested calculations and say "the chances of me dying at 70, 80, etc... are zero, and the chance of me living till 100 is 100%". Heck, people even thought of life after death, well not quite but something like a head transplant.

So, it's back to their original premise of delaying till 70.

Lol. Yep, if i want to prolong my life by transferring my head to a younger body, ill take SS at 70 haha. But if i Want to enjoy life and stay on my current body - i will get it at 62



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[Sunset]

Over the years I have written several times similarly to this article. There are all kinds of special situations which are very important to the individuals who could be affected by these other than ordinary conditions. But the idea that the general case does not present a dominant strategy seems strange to me. It is insurance, at a cheap rate, and with the worlds most secure insurance company. Nevertheless, I am sure that these threads will continue to show up, and that many people who have no immediate need for the money, are not in a special category, and who are not deathly ill, will continue ti take SS at 62. One thing that is very often given inadequate weight is the prevailing level of interest rates on long term TIPS.

It is just something about how the human brain weighs outcomes and information. If there is a general idea to be gathered from this, I think it is that we tend to overweight dramatic or available but far from determinative factors. As Bayesians emphasize, the base case should carry a heavy weight.

Ha

I think its the old psych experiment of immediate gratification: eat the marshmallow now, or wait until the experimenter returned (about 15 minutes later), and earn two marshmallows.

With SS you can have it now.... or wait and get more per month later.
It's like the candy at the checkout line.

 

[Forced to Retire]

The reason most people take their social security before age 65 is they need the money!

They were not able to save enough money when they were working full time to cover their day to day expenses from the standard 4% withdrawal.

Yes, many people on this board are quite proud of yourself and had great careers, made wonderful financial decisions, saved lots of money and had great skills and a wonderful career and were able to retire early and can support yourself strictly on pension and savings and can wait until you are seventy to collect Social Security. (And you are convinced you will live to 100.) But that is not typical.

Most Americans are thrown out of the work force well before they are seventy years old. Maybe their spouse is ill. Or they are ill, or just can't get the energy to do a full time job and a two hour commute anymore. Or they are fired, like me, for being old and due to age discrimination in hiring, just can't find another career job.

Collecting Social Security at age 62 is completely logical for one very good reason- Most people at age sixty two plus are not working in their peak income job anymore and NEED THE MONEY NOW!

 

[RunningBum]

Don't ask questions if you're not going to like the answers and complain about them.

 

[marko]

Maybe the next thread concerning a SS question we can just have a boilerplate statement on post #2 saying:

It depends
YMMV
Everyone is different
Do some research
Run FireCalc
The break even is 80

 

[alaska55]

The break even point might be 80 but by taking SS at 62, it allows taking less from the IRA which then keeps growing.

 

[Forced to Retire]

The break even point might be 80 but by taking SS at 62, it allows taking less from the IRA which then keeps growing.

EXACTLY!

Missing in the discussion about whole topic about when to take Social Security is the fact that most people who are actually retired and don't take Social Security until they are 70 years old, are pulling money out of their taxable 401K and IRA funds like crazy at an accelerated rate to cover their expenses until they reach seventy. As that money is pulled out, you are paying taxes and it and the principal $- that could have been earning all kinds of investment return, is gone.

So the break even date of 78 years old is actually much later based on the stock market returns that are lost as more principal $$ is pulled out of the retirement accounts. VS. if you collect Social Security at age 62, you don't have to withdraw as much money out of your IRA and 401K during the years you are 62-70.

 

[Which Roger]

The break even point might be 80 but by taking SS at 62, it allows taking less from the IRA which then keeps growing.

Should say "taking less from the IRA which hopefully keeps growing." SS is guaranteed to grow between 62 and 70. Not so with an IRA. So again, it depends.

 

[harley]

The reason most people take their social security before age 65 is they need the money!

They were not able to save enough money when they were working full time to cover their day to day expenses from the standard 4% withdrawal.

Yes, many people on this board are quite proud of yourself and had great careers, made wonderful financial decisions, saved lots of money and had great skills and a wonderful career and were able to retire early and can support yourself strictly on pension and savings and can wait until you are seventy to collect Social Security. (And you are convinced you will live to 100.) But that is not typical.

Most Americans are thrown out of the work force well before they are seventy years old. Maybe their spouse is ill. Or they are ill, or just can't get the energy to do a full time job and a two hour commute anymore. Or they are fired, like me, for being old and due to age discrimination in hiring, just can't find another career job.

Collecting Social Security at age 62 is completely logical for one very good reason- Most people at age sixty two plus are not working in their peak income job anymore and NEED THE MONEY NOW!

When you make statements of assumptions and act as if they are facts, you need to back them up with references or they'll be disregarded. I disregard much of what you just wrote. While I do believe most people take SS at 62 because they didn't save enough, I totally reject your comments about most people being thrown out of the work force. I suspect most people who start at age 62 were blue collar workers who can't do that kind of work anymore, or who worked 30+ years and retired with a pension (gov't workers, cops, people like that) and want to supplement their pension with their SS.

Collecting SS at age 62 is completely logical if you've figured out the options and it makes sense for you. Collecting SS at age 62 would be about the stupidest financial decision I could make, so where's the logic in that?

EXACTLY!

Missing in the discussion about whole topic about when to take Social Security is the fact that most people who are actually retired and don't take Social Security until they are 70 years old, are pulling money out of their taxable 401K and IRA funds like crazy at an accelerated rate to cover their expenses until they reach seventy. As that money is pulled out, you are paying taxes and it and the principal $- that could have been earning all kinds of investment return, is gone.

So the break even date of 78 years old is actually much later based on the stock market returns that are lost as more principal $$ is pulled out of the retirement accounts. VS. if you collect Social Security at age 62, you don't have to withdraw as much money out of your IRA and 401K during the years you are 62-70.

Have you even read the thread you started? These issues are discussed, in detail, in the posts above. And you come in with "what's missing in these discussions is...". Hyperbole won't get you too far around these parts.

 

[alaska55]

Should say "taking less from the IRA which hopefully keeps growing." SS is guaranteed to grow between 62 and 70. Not so with an IRA. So again, it depends.

And we all die one day. It could be at age 69 and 364 days so yes it depends. Everybody's situation is different another it depends. Are you married or single another depends and I'm not talking about the adult diapers.

 

[marko]

Missing in the discussion ....

So the break even date of 78 years old is actually much later based on the stock market returns that are lost as more principal $$ is pulled out of the retirement accounts. VS. if you collect Social Security at age 62, you don't have to withdraw as much money out of your IRA and 401K during the years you are 62-70.

I'm going to unsubscribe from this thread now.

I had commented on the IRA withdrawal/tax issue 20 minutes after your original first post (reply #4) as have a several others.

If you don't read the responses........

 

[gerntz]

Here's a link to someone that's calling it what some (I think) wise people have been calling it...longevity insurance.


Most People Take Social Security At The Worst Possible Age | Marotta On Money

While it's likely a good article,
"because most people (approximately 48% of women and 42% of men) start taking Social Security at age 62", is inherently inaccurate since either 42% or 48% of anything is most of the whole. Largest portion? Likely.

 

[Koolau]

EXACTLY!

Missing in the discussion about whole topic about when to take Social Security is the fact that most people who are actually retired and don't take Social Security until they are 70 years old, are pulling money out of their taxable 401K and IRA funds like crazy at an accelerated rate to cover their expenses until they reach seventy. As that money is pulled out, you are paying taxes and it and the principal $- that could have been earning all kinds of investment return, is gone.

So the break even date of 78 years old is actually much later based on the stock market returns that are lost as more principal $$ is pulled out of the retirement accounts. VS. if you collect Social Security at age 62, you don't have to withdraw as much money out of your IRA and 401K during the years you are 62-70.

It sounds like many folks here have given up on Forced to Retire. In case he hasn't given up on himself, I'll attempt to partially refute his statement about taxes paid on qualified money taken out INSTEAD of taking early SS.

Played correctly, many folks here have pulled money out of 401(k)s or IRAs and payed no or very low taxes. NOT taking SS early is one of the many tools in the not-paying-much-tax tool box. It lowers taxable income in a given year NOT to have SS money and lowers RMDs later on. It's part of a LONG TERM strategy. It's difficult to do it perfectly because none of us has perfect knowledge (what will tax rates be later? How much will your qualified money grow to? Will I kick early or late?) It's all part of the game. And TAXES are a big part of the game. Folks here (myself, not so much) have learned to play the tax game very well, indeed.

I am currently paying only to the top of the 15% bracket as I pull IRA/401(k) money out to either live on or convert to Roth. I'll take SS at 70. In doing so, I believe I will ultimately pay less tax in the long run - though in the long run, we are all dead.

FWIW I think Forced to Retire is probably correct that it's better for him to take SS early - he needs the money. More or less "end of story" but YMMV.